Alberta’s 25 Most Innovative Organizations in 2014

The Race to Innovate Starts With Leadership

Picture Enzo Ferrari. It’s 1974, and Enzo has an espresso in one hand and the newspaper in another. He sits in a folding chair, wearing his trademark Ray-Bans and fitted suit while, just inches from his feet, a 700-horsepower Ferrari Formula One race car thunders past on his test track in Maranello, Italy. Enzo barely flinches because, well, that’s his style. Known as “The Old Man,” Enzo created Ferrari in 1928 as a racing team, and in 1948 started his road-car company to finance his squad. When his Formula One cars tested, Enzo sat beside the track, keeping staff motivated for fear of invoking his great temper.

But Enzo was a traditionalist, not an innovator. In 1958, when the British Formula One team Cooper built the T51, with its engine behind the driver, Enzo refused to follow suit. “The horse doesn’t push the cart; it pulls it,” he scoffed. He kept Ferrari engines in the front of his race cars, despite his capable engineers’ best suggestions, and for years he got beat by his competitors.

Now, picture Bruce McLaren. It’s the early 1960s, and the modest, unassuming New Zealand engineer-turned-racer is testing his car. He notices part of the bodywork flapping violently, signalling to him that it’s blocking airflow. McLaren, an analytical and iconoclastic mind, pulls into the pits, grabs a pair of shears and, as his mechanics watch in terror, cuts air holes in the bodywork. When he resumes, he immediately starts setting lap times faster than before.

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The “nostrils” he cut behind his car’s radiator that day are now part of every front-engined race car. McLaren started his Formula One team in 1963, and died at the wheel of a race car in 1970. He was not a traditionalist. Instead, McLaren was innovative to the end.

What can Ferrari and McLaren, as organizations, teach us about innovation? The answer is that leadership can define your relationship to it, which in turn can define the value you get out of it. At Ferrari, today the most powerful brand in the world – as defined by consultants Brand Finance – ­­as well as the best-funded Formula One team and the organization with the most style per capita, innovation is always second to romance and fashion. Rarely is a Ferrari racer innovative. The company is now under the leadership of the dapper but rather old-school Luca di Montezemolo. And even during the team’s heyday, with Michael Schumacher behind the wheel, Ferrari won by testing more than any other – at a cost of thousands of dollars per kilometre – to gain its advantage.

The speed did not come through innovation but near endless resources. On the flipside, McLaren is now headed by the notoriously detail-obsessive Ron Dennis, who keeps watch over the team at the superhero-lair-like McLaren Technology Centre, which he commissioned and helped design. The centre is infamous for its spaceship-like cleanliness, which Dennis demands, but also for being at its core dedicated not to Formula One in particular but to innovation in general. When Dennis took over McLaren, in 1981, race car engineering was still known as a black art. “But black art was a cloak for ‘We don’t really know,’ ” Dennis told Director magazine in 2009. “It was intuitive engineering. I decided to make it a science. We will develop science to take away uncertainty to make winning a certainty.” The innovation that followed at McLaren made it a dominant force.

Innovation has always defined Formula One. The teams Ferrari and McLaren built still battle each other in the series. The most innovative team does not always win – there are too many variables in racing, like reliability, and human error and sheer bloody-mindedness. But the most innovative is always, always the fastest. The most innovative team forces all others to either match its developments or become slow.

And the pace is relentless. Every 15 minutes, on average, each of Formula One’s 12 teams will engineer a new part that makes another obsolete, by shaving thousandths of a second in lap time. That bespoke part will be manufactured at a cost of untold thousands, used perhaps once and then quickly replaced. And this development is simply to tread water. To gain an advantage on a competitor, a Formula One team must innovate in a realm few other organizations can imagine.

Today, each McLaren racer is covered in more than 100 sensors that harvest some 6.5 billion data points each race, allowing each variable – from speed, to pressure, to temperature – to be tested, controlled and improved. While this has become the norm for Formula One – today, each Ferrari racer is similarly equipped – it wasn’t always the case. McLaren, under Dennis, decimated the Formula One competition during the 1980s using this analytical, scientific approach. McLaren led and, reluctantly, only to keep up, Ferrari followed suit.

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While both teams have jaw-dropping trophy cases, their respective approaches to innovation define the value they can ultimately create from it. In Ferrari’s case, nostalgia rather than technology is at the heart of the brand, even though its cars are often cutting edge. People look to Ferrari for emotion, exuberance and passion, not for science or ideas. The Ferrari brand is the product, and that brand is built on history. For McLaren, on the other hand, innovation is everything. And the skills developed to analyze the patterns created by big-data harvested in Formula One have created several new revenue streams for McLaren.

McLaren Applied Technologies, for example, puts its analytical approach to use for everything from improving athlete performance during the 2012 Olympics, to football squads, to accelerating market-readiness for new innovations and for using biotelemetry for GlaxoSmithKline. And beyond the cars, lessons learned in designing those hyper-fast Formula One pit stops are now being applied by McLaren Applied Technology to improve pedestrian efficiency in Heathrow Airport.

The lesson here is more like a question: Which team would you prefer your company to be – Ferrari or McLaren?

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